Do bin-busting yields and low interest rates automatically mean you should add galvanized girth to your storage?

"If you really want more storage, you can probably justify it," says Darrell Good, University of Illinois ag economist. Harvest convenience is not easy to put a dollar value on because it's not actual added income, he adds.

"I'm not sure I could put a price on the convenience of owning our own bins," says Donald Fisher, who farms with his son Vincent near New Vienna, OH. "We're busy hauling from the field to the grain dryer in the fall. We don't have time to haul it to the elevator. But when the corn's going down, having the bins is worth the extra day or two we'd spend hauling to the elevator."

The added convenience often adds to their bottom line, too, says Vincent. "It's easier to play the basis game when you have the grain on your farm," he says.

There are five basic reasons to add storage, say experts and growers:

  • To gain harvest convenience. "You can't let $250,000 of equipment sit while you haul grain to town and wait," says Ron Sloan, who farms with his four sons near Assumption, IL. "We've got a small window in which to get things done. If you own the bins you can start when you want and quit when you want."

  • To add income. Prices are lowest at harvest. Having grain in the bin instead of at the elevator means a chance to catch additional revenue.

    On average, corn prices increase about 30¢/bu. from harvest to late spring/early summer, says William Edwards, Iowa State University ag economist. But 20¢ of that increase is eaten away with interest, depreciation and maintenance costs.

    Before making a bin-building decision, Edwards advises growers to push the pencil, or better yet, create a spreadsheet. Download a grain bin analysis spreadsheet from www.farm doc.uiuc.edu/fasttools/index.html.

  • To add market flexibility. "If I haul to an elevator, they've got me. I have to sell it there," Sloan says. "I like to control my grain."

    That control often nets him higher prices. He's gladly hauled his grain 100 miles to St. Louis for 20¢/bu. more than the local Decatur, IL, price. Sloan pocketed 11¢/bu. after figuring in a 9¢/bu. hauling cost.

    Sloan, who uses 63 bins (22 owned and 41 rented), says renting storage works well, too.

    Renting storage is a viable option, agrees Tim VanDerWal, ag loan officer, for Wanda State Bank in Wanda, MN. "There are bins around for rent. Consider them before you build."

  • To capture identity-preserved (IP) crop premiums. The Fishers raise specialty corn and Roundup Ready seed soybeans. Sloan raises several varieties of seed soybeans, including foundation seed. These specialty crops offer a premium, but also call for on-farm storage until the client is ready for delivery.

    The Fishers say they've gotten as much as a 30¢/bu. premium on high-oil corn. Sloan's seed beans can net him premiums from 25¢ to 85¢/bu., depending on the quality.

    Sloan recommends that farmers build small for the greatest IP storage flexibility. Most of his bins are 10,000-bu. capacity; his largest bin holds just 18,000 bu.

  • To add to their capital investments. "I pay for these bins whether they're on my farm or at the elevator. I prefer that they're on my farm," says Merle Henry, Wilmington, OH. "It's the key to the efficiency of the whole grain harvest system."

Henry is currently expanding the grain handling system his father had built on the family farm. The new system will have more than 200,000-bu. storage -- enough to store his entire harvest. To increase efficiency, he's adding an 11-ft. pit that'll hold 250 bu. and should allow him to unload in six minutes compared to the 30 minutes it takes now.

Henry figures that investing in a grain storage and drying system will pay for itself in 10 years. And since the bins have 30- to 40-year life spans with good maintenance, he counts himself money ahead and a more efficient farmer to boot.

Before You Build

If you've decided on-farm storage is the right investment for you, consider the following, says Dick Probasco, project designer for D&E Equipment, a grain systems company in Wilmington, OH.

  • Have a plan. Know what you want your final grain system to look like, even if you're not putting it all up at once, he notes.

  • Shop in winter; that's when you'll find up to 15% discounts.

  • Schedule construction early. "If you wait until midsummer to decide to build, not only will you pay full price, you may have trouble finding a crew that can get it up by fall," he says.

  • Request proof of insurance. Probasco says his company carries insurance, but he's rarely asked about it. That's a big mistake. "Look out when hiring a contractor," he says. "Know who's liable for what."

If you're putting up the bin yourself, make sure you've got construction insurance. If something happens to the bin before it's finished, your regular policy may not cover the damage, he says.

Creative Financing

Here are a few options for creatively financing your storage.

Cargill AgHorizons offers to pay up to 100% of the cost of a bin, ladder and a standard aeration floor through a program called On-Farm Storage. In return, you contract up to 25% of your production for a set maximum price for up to four years.

"This program allows farmers to add storage space to their farms with little or no cash outlay," says Dennis Inman, customer solutions leader for Cargill. "We've had quite a number of farmers who have had zero out-of-pocket costs for the bin package."

Ask your local Cargill elevator for details. But keep in mind that freight, delivery, concrete, construction, electrical and other bin costs are not factored in.

The Farm Service Agency (FSA) also offers a financing option: Farm Storage Facility Loan Program. It'll loan up to 85% of the net cost of building the storage (up to $100,000) for up to seven years -- at low interest rates.

Most storage structures are eligible. However, portable handling or drying equipment and portable or permanent weigh scales aren't.

The catch? Loans aren't disbursed until construction is done and inspected by FSA. Check with your local FSA office or visit www.fsa.usda.gov for details.

Other financing options may be available. Ask local dealers and elevators what they offer.